The big blind spots in GDP numbers

Economy No. 18 19 September 2026 · 1 min read

1. The recent 7.8% growth cannot be made up. India's economy grew 7.8% in April-June 2026, up from 6.9% a year earlier. Former finance secretary Subhash Chandra Garg said it was really 2.6%. Garg's 2.6% is wrong because he mixed the old and new GDP series (base years 2011-12 vs 2022-23). Steel consumption rose 8.3%, power demand 12%, passenger-vehicle dispatches 25.9%, dealer sales 22.6%, and manufacturing value added 9.2%. So, industry is clearly growing.

2. Services could be the blind spot. Services grew 10.0%, while finance, real estate and professional services grew 12.1%. Tonnes of steel or cars sold can be counted, but you cannot quantify services in the same way. Services make up more than 50% of the economy and most of them still run on cash and are unorganised, and they were also among the areas most affected by the February 2026 GDP revision.

3. The GST cuts may be temporarily boosting growth. The September 2025 GST cuts pushed inflation down to 1.54% in September and 0.25% in October. This creates a low price base, making real growth look stronger. That is not fake, because goods really became cheaper. But by that math, the boost should fade once both periods include the tax cuts.

The next useful test will be in October-December, when the GST cut will be present in both sides of the comparison.

Inflation three ways, each quarter against a year earlier, Q1 FY24 to Q1 FY27: wholesale prices (WPI), retail prices (CPI) and the GDP deflator, the inflation MoSPI removes from rupee growth. All three fell through FY26 to near zero after the GST cut of 22 September 2025. In April-June 2026 wholesale prices rose 9.4% and retail prices 3.9%, while the GDP deflator was 2.3%.

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